PGIM is preparing to invest up to $1bn into private credit secondaries, stepping up its presence in a market that is rapidly emerging as a core liquidity channel across private markets.

The asset management arm of Prudential Financial plans to deploy the capital over the next two to three years, targeting second-hand interests in private credit funds across direct lending, mezzanine finance, and special situations. The strategy will pursue both GP-led and LP-led transactions in the US and Europe, with a focus on middle-market deals.

The initiative will be led by Alex Stuart, managing director and head of private credit secondaries at PGIM, alongside senior principal Maelle Reichenbach. The team will be supported by PGIM’s broader private credit business and Montana Capital Partners, its established private equity secondaries platform.

“Private credit has evolved significantly in the half century that we’ve been operating in the asset class. The emergence of secondaries is a natural stage in that evolution,” said Matt Douglass, head of private credit at PGIM.

The move comes as the private credit secondaries market scales rapidly from a small base. While still smaller than private equity secondaries, the segment is expanding in line with a private credit market estimated to hold nearly $2tn in assets. Evercore estimates that deal volumes could exceed $50bn within the next two to three years, compared with $6bn in 2023.

PGIM’s expansion follows a broader industry push into the space. Ares Management recently raised $7.1bn for a private credit secondaries fund, while other managers have launched new vehicles to capture rising demand for liquidity.

The strategy also builds on PGIM’s wider shift towards private markets. The firm currently manages about $265bn across private credit and secondaries and last year reorganised its credit operations by merging public and private credit into a single platform overseeing close to $1tn in assets.

The planned allocation underscores how secondaries are becoming an increasingly important tool for large asset managers seeking to combine scale, liquidity provision, and defensive credit exposure in a higher-for-longer rate environment.

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